Money and Relatives
The goal of financial planning is to make life more meaningful to you and everyone around you, including your family
“The love of family and admiration of friends is much more important than wealth and privilege.”
– Charles Kuralt
One thing I love about being Filipino is that we value family more than anything else. This is why it is sad to hear stories about families not getting along because of the one thing that at times overpowers the love for family—money.
Over the past three years of being a financial planner, I’ve heard countless of times questions like, “What if it’s my relative who owes me money, how would I ask them to pay me back?” or “What if my in-laws are always asking for money and my spouse can’t say no?” or “What if my parents always ask for money but they spend it on things we don’t really need and get mad if I don’t give in? What will I tell them?”
Answers to these questions may be simple to someone like me, who is not part of the family, but when you are in that situation, it’s harder than it seems. When people consult me about how to prepare or handle outside family members who constantly ask for money, I give them two choices: say ‘no’ or prepare for an alternative approach.
It’s hard to say ‘no,’ especially to people you love and care for. But sometimes, family members abuse your generosity and ask for money because they have spent their own funds on luxuries they really couldn’t afford. In situations like this, saying ‘no’ would seem to be the better option.
I feel, though, that preparation is still the key for us to sidestep the part where we completely shut down our relatives. Here are some tips I’ve learned over the years about preparing for these types of situation with your family:
Set up a Kamag-anak Fund. This concept is similar to your emergency fund, but this time you set aside some amount every month in a different account. This fund would only be used if a relative asks for any financial support. This way, you won’t have to worry about reducing your emergency fund or some other funds that are for other purposes. With you having already saved, even if your relatives decide not to pay you back, it won’t hurt your financial situation as much.
Include relatives in the monthly budget. If you are budgeting on a monthly basis, allot a portion of your salary/income for your relatives. In case the allocation is not used for the month, you can set it aside as part of your kamag-anak fund or your emergency fund. But what if your relatives are asking for more than what is budgeted? Well, there are a few things you can do to address this. One is, you can just give them what was allocated and tell them that’s the most you could give for now, or lower your allocation to other items in your budget and use the saving to cover the extra amount your relatives are seeking. Either way, you don’t completely shut them down.
Increase your emergency fund. Some people prefer to just save everything in their emergency fund for convenience. The danger in this is you might be depleting this fund without your realizing. However, if you intend to use your emergency fund for your relatives as well, then it is advisable to increase your deposits since it will now become your personal and your relatives’ emergency fund. Also, continue to save into this fund even if you’ve reached the 3-6 months standard.
As I’ve written time and again, the goal of financial planning is to make life more meaningful to you and everyone around you, including your family. These simple preparations hopefully give you more peace of mind and lessen your worry about family and money. Money is important, but it is no substitute for the fulfillment we get from love, especially from family.
Jeremy Jessley Tan is a Registered Financial Planner of RFP Philippines. He is currently a Wealth Portfolio Manager for one of the leading insurance companies in the Philippines.
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